Equilibrium Discovery and Preopening Mechanisms in an Experimental Market

Biais, Bruno, Bisière, Christophe and Pouget, Sébastien (2009) Equilibrium Discovery and Preopening Mechanisms in an Experimental Market. IDEI Working Paper, n. 543

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Official URL: http://tse-fr.eu/pub/7534

Abstract

We experimentally analyze equilibrium discovery in i) a pure call auction, ii) a call auction preceded by a nonbinding preopening period, and iii) a call auction preceded by a binding preopening period. We examine whether a preopening period can facilitate coordination on the Pareto dominant equilibrium. During the nonbinding preopening period, traders tend to place manipulative orders. After observing such orders, participants learn to distrust cheap talk and coordinate less on Pareto dominant outcomes. In contrast, we find that, when preopening orders are binding, they improve the ability to coordinate on high gains from trade.

Item Type: Monograph (Working Paper)
Language: English
Date: January 2009
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSM Research (Toulouse), TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 18:14
Last Modified: 07 Mar 2018 13:23
OAI ID: oai:tse-fr.eu:7534
URI: http://publications.ut-capitole.fr/id/eprint/16199

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